India and Iran sign 'historic' Chabahar port deal

Prime Minister Narendra Modi has announced that India will build and operate a key Iranian port after his talks with President Hassan Rouhani.

India would invest $500m (£344m) to develop the strategically important Chabahar port, close to Iran's border with Pakistan, he said.

The port would open a transit route to Afghanistan and Central Asia for Indian goods and products, avoiding the land route through Pakistan.

Mr Modi began his Iran visit on Sunday.

Delhi also wants to bring gas from Central Asia to the port and then transport it to India.

"The bilateral agreement to develop the Chabahar port and related infrastructure, and availability of about $500m from India for this purpose, is an important milestone. This major effort would boost economic growth in the region," Mr Modi said.

Mr Rouhani has welcomed India's investment.

"Considering all the credit lines that are going to come from India into the Chabahar port, it can very well turn into a very big symbol of cooperation between the two great countries of Iran and India," Mr Rouhani said.

Iranian media on visit

Iranian newspapers have highlighted the strategic and economic importance of Mr Modi's visit.
"India wants to challenge China's power in central and South Asia through Chabahar port," Iran newspaper says.

Noting that China is "trying to control the pulse of regional trade by making extensive investments in the Pakistani port of Gwadar", the paper says that India is "now positioned against its strong competitor by investing in the port".

Referring to India's "immense need for energy", the paper goes on to say that Iran is "capable of fulfilling" this need.
E'temad newspaper adds that Mr Modi's visit and the signing of agreements on joint projects, energy and connectivity "will ring danger bells in Islamabad, China and Riyadh".

The business daily, Ta'adol, welcomes cooperation with India but also reminds its readers of "setbacks" that Iran has faced due to India.
"We should raise our complaints… and ask them [India] to be more honest in their trade
with Iran, and to fulfil their obligations more seriously," the paper says.
Compiled by BBC Monitoring's Tarique Ata

"The distance between Kandla (in the western Indian state of Gujarat) and the Chabahar port is less than the distance between Delhi and Mumbai, and so what this agreement does is to enable us quick movement of goods first to Iran and then onwards to Afghanistan and Russia through a new rail and road link," he told the PTI news agency.

Mr Modi was welcomed by Mr Rouhani at the Saadabad Palace in Tehran

Correspondents say that the deal will also help India counter the growing influence of China, which has invested in Pakistan's Gwadar port, in the region.

Meanwhile, the two nations also signed agreements to cooperate in aerospace, biotechnology, nanotechnology and counter-terrorism.

India and Iran share centuries-old cultural and linguistic ties, but their relations have suffered several setbacks in recent years.

Iran was unhappy when India supported an International Atomic Energy Agency resolution condemning Tehran's nuclear programme in 2009. India also reduced its oil imports from Iran in the following years.

Iran, India, Afghanistan sign transit accord on Chabahar port

Iranian President Hassan Rouhani, speaks in a joint press briefing with Indian Prime Minister Narendra Modi and Afghanistan President Ashraf Ghani. AP

TEHRAN: Iranian President Hassan Rouhani, Indian Prime Minister Narendra Modi and Afghan President Ashraf Ghani on Monday signed a three-way transit agreement on Iran's southern port of Chabahar.

India said it will invest up to $500 million in a deal to develop a strategic port in Iran and both countries planned a number of projects they say are worth hundreds of millions of dollars.

“Today is an important and historical day of development of relations between the three countries,” Rouhani said in a televised speech, seated between the two other leaders.

“From Tehran, New Delhi and Kabul, this is a crucial message ... that the path to progress for regional countries goes through joint cooperation and utilising regional opportunities."

Modi said: “We want to link to the world, but connectivity among ourselves is also a priority.”

“Our will starts from Chabahar today, but its end will be an all-out comprehensive development and economic-cultural cooperation,” said Ghani.

The deal and plans were announced during a visit by Indian Prime Minister Narendra Modi, the first such trip in more than a decade.

In a ceremony marking the agreements, Modi said the bilateral agreement to develop Chabahar, in southern Iran, and the “availability of about $500 million from India for this purpose is an important milestone,” in relations between the two countries.

The development of the port of Chabahar expands a trade route for the land-locked countries of central Asia that bypasses Pakistan.

Modi also described cooperation in the oil and gas industries as key components of economic cooperation between Tehran and Delhi.

Iran President Hassan Rouhani said working on the port can be a “great symbol” of cooperation between Iran and India. He said Iran's energy resources and Indian mines can pave ground for cooperation in the aluminum, steel and petrochemical industries.

The two leaders will discuss the port project later with visiting Afghan President Ashraf Ghani. Modi will also meet Iran's Supreme Leader Ayatollah Ali Khamenei.

The two countries also signed a number of agreements to enhance technological, petrochemical and banking cooperation. India also began paying back $6 billion in debt from past oil purchases, last week giving Iran $750 million.

It has said it will pay back the remainder of the debt. In 2012, Iran was India's second-largest crude supplier but oil exports subsequently fell due to international sanctions over Iran's disputed nuclear program.

Tehran has been seeking to reintegrate into the global economic system following a landmark deal with world powers that lifted sanctions in return for limiting its nuclear program.

Iran has offered India bigger role in strategic port, says envoy

NEW DELHI: Iranian President Hassan Rouhani has asked India to invest in infrastructure projects worth $8 billion, including an expanded role in developing a strategic port that will open up access to Central Asia, Iran’s envoy to New Delhi said on Friday.

The port of Chabahar in southeast Iran is central to India’s efforts to circumvent arch-rival Pakistan and open up a route to landlocked Afghanistan where it has developed close security ties and economic interests.

Mr Rouhani suggested the larger role for India during a meeting with Prime Minister Narendra Modi on the sidelines of a summit in Russia days before the historic nuclear deal between Iran and world powers, Iran’s ambassador to India said in an interview.

“The potential between Iran and India is great but we were just facing such a wall of sanctions, wall of American pressure,” Ambassador Gholamreza Ansari said.

He said that with sanctions likely to be lifted soon, it was a “golden time” for India to seize investment opportunities because of the two countries’ close trade ties and shared interest in improving Central Asian transport links.

“Connectivity is the main policy of Modi that coincides with Iran’s government policy,” Mr Ansari said. “We have offered them, in connectivity, $8bn of projects.”

‘Offer involves connectivity projects worth $8bn’

Mr Modi’s meeting with Mr Rouhani was part of a tour of Central Asia focused on increasing India’s role in the region. It was not immediately clear how the Indian premier responded to Mr Rouhani’s offer.

India’s foreign ministry did not respond to a request for comment.

Iran and six world powers reached a nuclear deal on Tuesday, clearing the way for an easing of sanctions on Tehran.
India and Iran agreed in 2003 to develop Chabahar on the Gulf of Oman, near Iran’s border with Pakistan, but the venture has moved slowly because of the sanctions over Iran’s nuclear programme.

The two countries maintained a close relationship despite the US-led trade restrictions that halved their oil trade to 220,000 barrels per day last year.

In May, India’s Shipping Minister Nitin Gadkari and his Iranian counterpart, Abbas Ahmad Akhoundi, signed an $85 million deal for India to lease two existing berths at the port and use them as multi-purpose cargo terminals.

Under the new proposal India could help build second and third terminals at the port, as well as railway connections into the rest of Iran, Mr Ansari said.

India has moved slowly on opportunities in Iran in the past, including the giant Farzad B gas field. Mr Ansari said India was the “first priority” to develop Farzad B, but urged New Delhi to move fast: “If they drag their feet, the market will not wait.”

NEW DELHI: Keen on rolling out infrastructure projects in Iran and Afghanistan, union minister Nitin Gadkari has said that once Chabahar Port in Iran becomes operational, there will be no looking back as it will be a gateway to golden opportunities. As a special envoy of India, deputed by Prime Minister Narendra Modi, Road Transport and Shipping Minister Nitin Gadkari is in Tehran and represented India at the swearing-in of President Hassan Rouhani for the second term.

"Talks are on for building railways and roads through Chabahar till Afghanistan and then we have access to Russia. Once Chabahar is operationalised, which we are hopeful to be in 12 to 18 months, it will prove to be a gateway to golden opportunities to boost trade and business," Mr Gadkari said.

Chabahar port, located in the Sistan-Balochistan province in the energy-rich Persian Gulf nation's southern coast, lies outside the Persian Gulf and is easily accessed from India's western coast, bypassing Pakistan.

"We are hopeful of ratification of Trilateral Transit and Transport Agreement by Iran and once approvals are given, the work will start," Mr Gadkari said.

The trilateral pact was inked during Prime Minister Narendra Modi's visit to Tehran in May 2016. The pact envisages establishment of Transit and Transport Corridor between India, Iran and Afghanistan using Chabahar Port as one of the regional hubs for sea transportation in Iran besides multi-modal transport of goods and passengers across the three nations.

The cabinet and the President had ratified the pact in November and December 2016, respectively. A government official said Afghanistan has also ratified it but Iran is yet to complete the internal processes of the ratification.

Mr Gadkari said operationalisation of the port will not accelerate the infrastructure projects but will be a "win-win situation" for the nations as it would give tremendous boost to tradeand offer vast opportunities to investors.

"Chabahar will not only boost ties between Iran and India but we will be closer to Afghanistan and then Russia... We can export goods till Russia. This will be a direct route," he said.

India has already built the Zaranj-Delaram Road in Afghanistan where the cargo reaching Zehedan can connect to. "The rail route is aimed at connecting the existing rail network of Iran at Zahedan, and subsequently to Mashad in north area, thereby providing access to Turkmenistan as well as northern Afghanistan through its connection to the Bafq-Mashad route," an official said.

This project will significantly enhance the opportunity for trade and business among the nations. Chabahar-Zahedan Railway line project is located in the Sistan-Baluchistan province in eastern Iran.

Mr Gadkari's visit assumes significance as India has accelerated work on Chabahar port and finalised some tenders for installation of key equipment at the port. "Civil construction work has started there. We have finalised tenders worth Rs. 380 crore for equipment out of Rs.600 crore and once the port becomes operational it will become a growth engine," the minister had said.

Why India must move fast on the Chabahar Port project in Iran

A handout picture provided by the office of Iranian President Hassan Rouhani on May 23, 2016 shows him (L) arriving for a press briefing with Indian Prime Minister Narendra Modi (R) and Afghan President Ashraf Ghani after signing a three-way transit agreement on Iran's southern port of Chabahar, at the Saadabad Palace in Tehran. | Handout / IRANIAN PRESIDENCY / AFP

Jan 16, 2017

Sanjay Kapoor

For most of the hour-long journey, Rashid (not his real name) concealed his excitement about speaking with the visitor he had ferried from Iran’s Konak airfield – a wobbly landing strip straight out of a Wild West film – to Chabahar port. As he came close to the swanky Firdaws Hotel located at the port’s free zone, Rashid couldn’t control his urge to speak. In accent-free Hindustani (he called it Urdu), he asked me, “Are you from India? Here everyone speaks in Urdu.”

Such an interesting initiation to Chabahar, a port city on the shore of the Oman Sea in Iran’s Baluch-Sistan province, made amply clear its strategic location and why India is promising to invest $20 billion in developing the port and other industries in its sprawling free zone. Chabahar allows India to side-step Pakistan, which blocks its access to Afghanistan and Central Asia. Translated as “four springs”, the port has been described by medieval traveller Al Beruni as the entry point to the Indian subcontinent. Pakistan’s Gwadar port, in which the Chinese are investing $46 billion, is barely 72 km away. Proximity to Pakistan’s Baluchistan not only sustains the Urdu of Baluchis like Rashid, but also relationships. Iranians get a 15-day visa to visit Pakistan for weddings and, in some cases, for treatment.

The easy access that Iranians have to Pakistan has been a reason for Islamabad to accuse India of destabilising their side of Baluchistan. Early last year, they arrested one Kulbhushan Jadhav who allegedly confessed that he was an agent of India’s external intelligence agency, the Research and Analysis Wing, which was engaged in stirring up trouble in the region. Pakistanis are using his presence in their custody to put the Iranians on the defensive and, during Iranian President Hassan Rouhani’s visit to Islamabad some months ago, he was aggressively questioned by the Pakistani media about what the Iranian authorities were doing to prevent this Indian subversion.

Pakistan, and also China, is deeply worried over Chabahar. Understandably, there is glee when reports show up in the media that Iranian officials are not really happy with the pace at which the jetties that were given to India at Shahid Bahesti port are coming up. India is committed to the timelines agreed upon when India, Iran and Afghanistan signed a trilateral agreement in May 2016. Afghanistan has been given another option to trade with India as Kabul found the trade transit treaty with Pakistan humiliating. Afghanistan President Ashraf Ghani told Islamabad categorically last September that it should allow goods-laden trucks from India to travel to the Afghan border if it wants reciprocity of access to Central Asia. As the relationship between the Afghans and Pakistanis combusts, pressure is being exerted by Kabul on India to complete the Chabahar port work.

The port authorities say dredging will be complete soon and they will be ready to receive Indian cargo ships in a month’s time. The Iranians want India to show greater speed in acting on the agreement. Ambassador Abdolhamid Fekri, associated with a government think tank in Tehran, wondered why “Indian ships can’t come on a friendship trip to Chabahar and stamp their presence”. He may have a point there. In Tehran, too, the mere mention of Chabahar to a lay person elicits responses such as “India is building a port there”. At least now, in the minds of Iranians, there is a complete identification of Chabahar with India.

Gateway to Central Asia

On their part, Indians are cognisant of its strategic location and its potential for opening a route to Afghanistan and Central Asia. There have been two significant trips where the port has figured in discussions on investment and connectivity. During Prime Minister Narendra Modi’s trip to Tokyo last November, his Japanese counterpart, Shinzo Abe, agreed to help India with the Chabahar project. Both leaders directed their aides to hammer out a plan to fast-track the project. India wants Japanese investment and help in building the railway track between the port city and Zahedan. Both India and Japan see strategic convergence in Chabahar as it allows the landlocked countries of Central Asia to find a route away from ports that enjoy Chinese domination like Gwadar.

The presidents of Kyrgyzstan and Turkmenistan, during their visits to Delhi, were also promised access to this warm water port. From all standpoints, the Iranian port, located in the Oman Sea away from the turbulence of the Persian Sea region, has the potential to reorder old routes into new ties.

According to the managing director of the Chabahar free zone, Abdol Rahim Kurdi, the port is the best entry point to connect three continents: Asia, Europe and Africa. India has been conversing with Iran since 2003 about developing this port but, due to Western sanctions and ambivalence at the top, there has been slow progress.

In the last three years, Chabahar’s development has picked up.

Whereas, in the last 20 years, there were 1,800 companies registered in Chabahar, in just three years the figure has shot up by 60%. Similarly, there has been a spike in investment. Kurdi says that this change has been “happening daily”. There have been many queries from Indian companies from the steel, petrochemical and fertiliser sectors, but Indian businessmen are still exploring whether this would be the right time to invest as issues pertaining to financing remain tricky since the European banks have not eased up despite the signing of the P5+1 nuclear deal. Their fears are exacerbated by the triumph of Donald Trump in the US presidential elections. While many in Iran were expecting his win, what has caused some worry is the manner in which he has chosen to surround himself with officials who have taken a public position with their dislike for Iran. Some of them, including Trump himself, have promised to tear up the nuclear deal with Iran after they assume office. There is a lot of support for preserving the deal in the US, but it is unlikely that stability will visit Iran and Chabahar soon – from the standpoint of investors.

It is due to these reasons that India, too, has been progressing slowly. Some officials in the external affairs ministry feel that this sloth in executing its part of the project could be a strategic mistake. Iran has been dropping hints that it would explore investment from other countries, including China, which has made a gargantuan investment of $46 billion in the China-Pakistan Economic Corridor that originates from Gwadar. Iran had earlier staved off pressure from Beijing to invest in Chabahar as it wanted India to be present for strategic reasons. China has suggested a railway line between Gwadar and Chabahar. India will have to move swiftly to grab the opportunity that Iran is offering to not just explore the land route to Central Asia, but also connect with the trans-shipment road corridors that Iran is building to reach out to Europe. The International North-South Corridor is one of them.

Chabahar versus Gwadar

Chabahar in many ways is better than Gwadar. It is a deep water port that is connected to land and the mainland, which does not really involve charges for loading and unloading. It has two wharfs, Shahid Kalantri with a capability of 25,000 ton bunker and Shahid Beheshti with 40,000 bunkers to moor. It has access to human resources trained at Chabahar Maritime University with the necessary skills for running a world-class port. It has access to international waterways in the Indian Ocean and has moderate climate.

Chabahar free zone officials are quick to point out to companies that they are away from the crisis area of the Persian Gulf and their investment will remain safe. During the Iran-Iraq war, the Iranian government had used this port to locate much of its maritime resources. To reiterate, it is the best route to transfer goods to Afghanistan. It has off-coast facilities that are linked to the provinces of Sistan, Baluchistan, Kerman and Khorasan. Besides, due to its geographical location and its proximity to neighbouring countries (the Indian port of Mundra is 900-odd km away) which have great markets and political stability, the Chabahar free zone has enormous potential to host large industries through joint foreign and domestic investments.

There is a section in the Indian strategic community that is uncertain about the Chabahar foray as it fears that if the Taliban or a hostile power takes over Kabul, then all their investment would be lost. India has already invested $2 billion in Afghanistan and is unsure whether this investment can be protected or will give any dividends. All these conundrums are upsetting Modi’s plans to give shape to a regional foreign policy revolving around the key issue of side-stepping and isolating Pakistan.

This article first appeared on Hardnews.

By agreeing to develop Iran’s Chabahar port, India will not only boost trade but add to its strategic

Prime Minister Narendra Modi visited Iran earlier this week, the first by a Indian Prime Minister in 15 year.

By: PTI New Delhi May 25, 2016

Chabahar port is located in Sistan-Balochistan Province on Iran’s southeastern coast and is of great strategic utility for India which will get sea-land access route to Afghanistan bypassing Pakistan. (Source: Reuters/File)

The pact between India and Iran to develop the strategically located Chabahar port, along with the one with Afghanistan on road and rail network, will counter China and Pakistan’s alliance in South West Asia, BMI Research said on Wednesday.
“The agreement between India and Iran to develop the latter’s port of Chabahar is a major boost for both countries, as well as Afghanistan. In particular, growing co-operation between the three countries will counterbalance China-Pakistan alliance in the geopolitics of South West Asia,” it said.

Prime Minister Narendra Modi visited Iran earlier this week, the first by a Indian Prime Minister in 15 year.A “milestone” pact on the strategic Chabahar Port in southern Iran, which will give India access to Afghanistan and Europe bypassing Pakistan, was among the agreements signed by India and Iran, which also agreed to cooperate on combating radicalism and terror.

Besides the bilateral pact to develop the Chabahar port, for which India will invest USD 500 million, a trilateral Agreement on Transport and Transit Corridor was also signed by India, Afghanistan and Iran, which Modi said could “alter the course of the history of the region”.

The bilateral agreements signed by India and Iran after detailed discussions between Modi and President Hassan Rouhani included one on setting up of an aluminium plant and another on laying a railway line to give India access to Afghanistan and Central Asia.

BMI Research, a Fitch Group company, said the governments of India, Iran and Afghanistan have taken a significant step towards closer co-operation by signing an agreement on May 23 to develop Iran’s southern port of Chabahar.

“Once the port is developed, it will provide a major boost for Indo-Iranian trade, and also provide a new route for Afghanistan’s exports, bypassing Pakistan.

“In particular, the new port at Chabahar is designed to compete with Pakistan’s port of Gwadar, which is being developed with Chinese assistance as part of the China-Pakistan Economic Corridor (CPEC),” it added.

CPEC in turn is part of a much bigger Chinese initiative known as ‘One Belt One Road’ (OBOR), which envisages new land and sea routes connecting China to Western Eurasia and East Africa.

Iran stands to benefit from Chabahar as it will get an enhanced port from which to export more goods to India and the Asia-Pacific region at a time when it is seeking to reintegrate itself into the global economy, BMI Research said.

Iran will also benefit from increased Indian investment. For their part, it seems that Indian firms are seeking to gain first-mover advantage in one of the world’s biggest new emerging markets, at a time when Western companies are still hesitant about entering Iran, it said.

India will strengthen its ties with Iran and thus its economic presence in the Gulf region.

In addition, trade to and from Chabahar will allow India to increase commercial influence in Afghanistan, physically bypassing Pakistan, whose generally hostile stance towards India impedes New Delhi’s ability to develop ties with Kabul, it added.

India’s interests in Afghanistan are mainly focused on challenging Pakistan’s position, but India is also interested in tapping Afghanistan’s natural resources and those of Central Asia, the agency said.

Afghanistan will get a new trade outlet to the Gulf, Arabian Sea and Indian Ocean bypassing the port of Karachi in Pakistan.

Afghan-Pakistan relations are complex and frequently strained due to Islamabad’s past support for the Taliban insurgency in Afghanistan. The Taliban suffered a blow on May 20, when its leader Mullah Akhtar Mansour was killed in a US drone strike, BMI Research said.

Chabahar Port: Strategic Necessity For India

May 29, 2017
By: Maj Gen P K Chakravorty (Retd)

Image Courtesy: Daily Mail

Editor’s Note

Chabahar is definitely an opportunity for Iran, Afghanistan and India. It’s also an opening to the sea for the land locked countries of Central Asia. Located close to Gwadar, it provides India an avenue to extend its reach and contest the emergence of China as the predominant influence in the region. In terms of capacity, the port is much smaller in design as compared to Gwadar, but with investments being more limited its viability is definitely greater. For India, it provides a routing to Afghanistan without having to pass through Pakistan, a linkage that the latter has always denied and is unlikely to provide in the foreseeable future. The author provides an evaluation of the project both from the strategic and also the economic viewpoint.

CHABAHAR PORT: STRATEGIC NECESSITY FOR INDIA

Image Courtesy: Quora

Chabahar port is located in Iran next to the Gulf of Oman and at the mouth of the Strait of Hormuz. It is the only Iranian port with direct access to the Indian Ocean. Located in close proximity to Afghanistan and the Central Asian countries of Turkmenistan and Uzbekistan, it has been termed as the Golden Gate to these landlocked countries. In terms of distance Chabahar is 700 km away from the capital of Baluchistan province, 950 km away from Milak, the closest city of Afghanistan and 1827 Km from Turkmenistan border. In terms of sea distances the Pakistani port of Gwadar is 84 km, Dubai is 565 Km, Karachi is 728 Km, and Mumbai is 1349 Km from Chabahar.

Iran- India partnership

During the 1990s India along with Iran and Russia, collaborated in backing the Northern Alliance in Afghanistan against the Taliban. The Taliban continues to be supported by Pakistan, even now. It was at this time that Iran invited India to develop the Chabahar port to obtain a land access into Afghanistan. This was followed by a trilateral agreement in 1997 with Turkmenistan to expand trade into Central Asia followed by another agreement with Russia to provide seamless transport between India and Europe via an International North South transport Corridor.

The attacks on the twin towers in New York and other places in the United States on 11 September 2001, led to the American Armed Forces along with several countries moving into Afghanistan. At this stage, the three countries India, Iran and Afghanistan got together in January 2003 agreeing on a joint development of transportation links to Afghanistan. India agreed to expand the Chabahar port and to lay a railway track between Chabahar and Zaranj.

India has spent 134 million US Dollars during 2005 to 2009 to construct a road from Delaram in Afghanistan to Zaranj at the Iran Afghanistan border. Iran has completed first phase of the Chabahar port at a cost of 340 million US Dollars. Connectivity from Chabahar through Milak, Zaranj and Delaram has been established to the Garland road in Afghanistan which connects the major Afghan cities Herat, Kandhar, Kabul and Mazar-e-Sharif. In March 2012, ships from India docked at Chabahar carrying 100,000 tons of wheat under humanitarian aid to Afghanistan. However, without further development of the port the roads remained unutilised. There were issues of American pressures which slowed down development work. In 2012, during the Non Aligned Meet at Tehran, the three countries, Afghanistan, Iran and India discussed the issue resulting in some progress. The agreements were finally signed in May 2016.

Image Courtesy: Press TV

In May 2016, India signed a series of 12 Memorandums of Understanding pertaining to the port of Chabahar. The most important one pertains to the deal between Iran and India which permits India to develop and operate two berths of the Chabahar port for 10 years. This will be done by India Ports Global, a Joint Venture between Jawaharlal Nehru Port Trust and Kandla Port Trust in partnership with Iran’s Aria Banader. The Company has guaranteed handling of 30,000 Twenty Foot Equivalent Units (TEUs) ships on completion of two years and eventually reaches a figure of 2,50,000 TEUs. The berths will be developed at a cost of 85 million US dollars. A container handling facility of 640 meters will be constructed and reconstruction of the existing 600 meters container handling capability in the second berth will be taken up. All these will be fitted with modern port handling equipment. This would result in the port handling capability of Chabahar being enhanced from 2.5 million tons to 8 million tons.

It is pertinent to note that the investment is supplemented with a 150 million dollars line of credit to Iran through the Exim Bank of India. Apart from this a Memorandum of Understanding was also signed for the financing of the planned Chabahar – Zahedan railway line as a part of the North South Transport corridor by Indian Railways construction unit – Ircon International. The offer entails providing the cost of 1.6 billion Dollars. This would enable Chabahar to be linked to Iran, Afghanistan and Russia by rail. The important issue at the moment is that the Port and Maritime Organisation of Iran has not completed the application of loan for 150 million US dollars despite reminders from the Exim Bank of India for the last nine months. This need to be expedited and the Iranian authorities are assuring that the same will be done. Viewed in the backdrop of the recent United States sanctions due to Iran recently testing a Ballistic Missile, the Iranians have stated that issue is under consideration. It is essential to note that Iranians are slow in their decision making and in the interests of both countries the application would be signed by the Iranian authorities.

Strategic Necessity

As per political observer Aagam G Shah’s statement in quora.com, the reason for Indian economic and geopolitical involvement with Iran is to counter the influence of China’s string of pearls strategy. The advantages that would accrue are as under:-

• It will provide a land route to Afghanistan, Iran, Central Asia and Russia. In doing so it will make way for India to bypass Pakistan in transporting goods to Afghanistan using a sea land route. At present Pakistan does not allow India to transport goods through its territory to Afghanistan.

• It would give momentum to the International North-South transport corridor of which both are initial signatories. It entails the ship, rail and road routes for moving freight between India, Russia, Afghanistan, Central Asia and Europe.

• It would counter the Chinese presence in the Arabian Sea through the support to Pakistan in developing Gwadar port.

Further it would enable our shipping vessels to be provided security if the need arises in the region.

• All these leads to the development of the region and with iron ore deposits available it could result in a steel plant being opened in this region. This would see the region developing economically apart from being a communication hub.

The other important issue is the Japanese interest in developing Chabahar. Japan’s State Minister for Foreign Affairs Mr Kentaro Sonoura during a visit to Afghanistan in January 2017, pledged to develop access for Chabahar. Japan’s interest in Chabahar is important to India as her assistance would ensure time bound completion of the port leading to timely optimization of facilities. Japan is an important strategic partner of India and her support would be essential in countering Chinese influence in Gwadar.

Image Courtesy: Khaama Press

Overall India is playing an important strategic role in Afghanistan. Currently India is training the Afghan National Army and providing limited military equipment. We are undertaking Capacity Development for which material both civil and military needs to reach Afghanistan. Chabahar provides connectivity and this in turn provides multiple strategic options. Apart from move of equipment we could plan training exercises initially at a small scale and later at a larger scale between the two Armies. Such training schemes would benefit us and at the same time make Pakistan shaky about the strategic depth as we would now be carrying out a manoeuvre which operationally would be a turning movement by India against Pakistan.

Way Ahead

Undoubtedly development of the port of Chabahar would be a game changer for the region. Apart from countering the Chinese port of Gwadar, the route would possibly eliminate the term ‘strategic depth’ from the lexicon of the Pakistan Armed Forces. It is hoped that the Iranian Government completes the application for the $ 150 million dollars loan and forwards it to the Exim Bank of India. Thereafter, Indians can move expeditiously. India would be able to extend its reach as a regional power, too.

It is extremely important that India connects on a direct route to Afghanistan without having to go through Pakistan to exercise its strategic options. Such a routing also provides a passage to the Central Asian Republics. Chabahar provides us this great opportunity and we must leave no stone unturned to turn this concept into a reality.

India-Iran port deal reveals tense Asian rivalries

Photo by: Uncredited
From left, Indian Prime Minister Narendra Modi, Iranian President Hassan Rouhani and Afghan President Ashraf Ghani hold hands in a show of solidarity after their trilateral meeting at the Saadabad Palace in Tehran, Iran, on May 23. (Iranian Presidency Office via Associated Press)

By Guy Taylor - The Washington Times - Sunday, May 29, 2016

A little-noticed deal this month between India and Iran to develop an obscure port in the Gulf of Oman is offering a glimpse into just how dramatically last summer’s Iranian nuclear accord stands to upend South Asia’s geopolitical dynamics — as New Delhi pushes to expand its influence in nearby Afghanistan, outflank rival Pakistan and challenge Chinese dominance in the region.

Indian Prime Minister Narendra Modi, Iranian President Hassan Rouhani and Afghan President Ashraf Ghani were all smiles at an unusual gathering last week in Tehran, where Mr. Modi pledged billions to develop Iran’s southeastern Chabahar port and help establish a free trade zone stretching toward the Iran-Afghan border during the coming years.

News of the deal prompted a wary reaction from some in Washington, amid concern that sanctions relief under the Obama administration-backed nuclear accord with Iran last year has paved the way for a key U.S. ally to align itself with Washington’s main adversary in the region.

But most South Asia experts say New Delhi remains firmly committed to its growing security cooperation with the U.S., and that its dealings with Iran are being motivated mainly by a desire to open a vast new trade link between a key Indian industry hub and the landlocked nations of Central Asia — without including rival Pakistan.

Iran’s Chabahar port, located on the northern side of the Gulf of Oman, sits less than 600 miles from western India’s export powerhouse of Gujarat state, where Mr. Modi served as chief minister for more than a decade prior to his election as prime minister in 2014.

It’s a long-stalled deal that has economic, diplomatic and security implications for states across the region and beyond.

“This is about ensuring transit access for Indian goods in general to Afghanistan through Iran, but potentially also to Central Asia,” said Tanvi Madan, who heads the India Project at the Brookings Institution in Washington.
“The Indians have tried for many years to get such transit access through Pakistan, but they’ve come to the conclusion that it’s just not going to happen and that they need to move forward another way.

“India also sees this deal as potentially contributing to the future stability of Afghanistan,” Ms. Madan said, adding that New Delhi is anxious to ensure that “Afghanistan has options other than going through Pakistan to get access to the sea.”

The big question, she said, is whether ground will actually be broken on the Chabahar project anytime soon.
New Delhi first made promises about the port back in 2003. But the plan got stalled for years by bureaucratic bungling on both sides and was then derailed by international tensions over Iran’s nuclear program — specifically when the Obama administration and its allies ramped up sanctions on Tehran in 2012.

Mr. Modi pledged $500 million to develop the port’s facilities and make it a major transshipment point for goods during last week’s meeting in Tehran. He also said India will spend some $16 billion during the coming years to build up the Chabahar Free Trade Zone with roads and railroads running inland to the north.

Mr. Rouhani said the projects could be a “great symbol” of Iran-India cooperation, with Iranian energy resources and Indian mines potentially paving the way for expanded trade in aluminum, steel and petrochemicals between the two nations.

Such plans fit within Tehran’s push to reintegrate into the global economic system following the lifting of international sanctions in exchange for Iran’s curtailing of its nuclear program under last summer’s accord with the U.S. and other world powers.

For New Delhi, the deepened engagement could mean easier access to oil and gas to feed India’s immense and growing energy needs.

Iran had been the nation’s second-largest crude supplier prior to the imposition of sanctions in 2012. Mr. Modi’s two-day trip to Tehran came with the announcement that India has begun paying back $6 billion in debt to Iran from past oil purchases — reportedly delivering some $750 million in such payments last week.

Friction with China and Pakistan?
The India-Iran-Afghanistan nexus comes as Pakistan has grown increasingly close to China, which has poured money and resources into its own port-development project in the Pakistan coastal city of Gwadar — just 45 miles down the coast from Chabajar.

Despite the threat of attacks by Islamist militants in Pakistan, the Chinese have forged ahead with a $46 billion China-Pakistan Economic Corridor project, the thrust of which revolves around developing Gwadar.

Construction at Gwadar is already well underway, with Beijing framing the project as essential to connecting its industries in western China to markets across the Middle East through Pakistan.

The Indians are keenly aware of Chinese plans and, according to Ms. Madan, a key part of New Delhi’s interest in backing a competing project through Iran stems from a desire to “make sure China is not the only option Middle Eastern countries have for trading in the future.”

Many believe the Pakistanis, who have been locked in a nuclear arms race with India for decades and have long resisted Indian involvement in Afghanistan, will view any India-Iran alliance with alarm.

“For India to build up a relationship with one of Pakistan’s other neighbors, you can’t look at that as anything but a threat,” said Richard M. Rossow, a senior fellow on U.S.-India policy studies at the Center for Strategic International Studies in Washington.

And from the Indian side, the idea of “geopolitically surrounding Pakistan makes a lot of sense,” Mr. Rossow said. “They’re putting a bet down that building ties with Iran will give them a friend on the other side of Pakistan that they can potentially leverage at some point.”

Pakistan’s embassy in Washington declined to even acknowledge the Chabahar Port announcement last week. When pressed, an embassy official said only that the Pakistani government views the China Pakistan Economic Corridor “as an important step toward growth and shared prosperity.”

But the prospect of friction with Pakistan seemed to be on Mr. Rouhani’s mind while he met with Mr. Modi and Mr. Abadi in Tehran for their celebratory summit. The Iranian president went out of his way to assure Pakistan that the project is not against Islamabad.

“Today’s deal will not be against any country, and activities of [Iran, India and Afghanistan] will serve the entire region and its peace and stability,” he said.

U.S. watching ‘closely’
To date, the Obama administration’s approach to India has centered largely around an effort to enlist New Delhi in Washington’s push for a coalition of nations to counter China’s growing influence in East Asia.

The most notable example came in January 2015, when President Obama visited New Delhi and signed the “U.S.-India Joint Strategic Vision for the Asia-Pacific.” Defense Secretary Ashton Carter last June inked a 10-year defense framework pact with his Indian counterpart.

“India is playing ball with the U.S. on security issues more than they ever have,” said Mr. Rossow, who suggested that India’s willing alignment with the Obama posture toward China may have created some “wiggle room” for New Delhi to expand its ties with Iran without objection from Washington.

“We look at India’s security role and we look east, we don’t look west,” he said.
But India’s moves have not gone unnoticed on Capitol Hill. Several U.S. lawmakers have raised questions about the extent to which the Chabahar Port deal might violate remaining U.S. sanctions on Iran, and expressed concern toward the prospect of deepening military ties between New Delhi and Tehran.

The Obama administration’s top official for South Asia told lawmakers that there has so far been no evidence of military-to-military or counterterrorism cooperation between India and Iran, but that U.S. officials have been carefully monitoring the situation.

“We watch very closely,” said Assistant Secretary of State for South and Central Asian Affairs Nisha Desai Biswal. “We have very candid conversations about what our concerns and red lines are.”
With Chabahar, “we have been very clear with the Indians on what we believe are the continuing restrictions on activities with respect to Iran,” Ms. Biswal said. “They’ve been very responsive and receptive to our briefings.”

As for potential sanctions violations, a State Department official speaking on background noted that the 2012 Iran Freedom and Counter-Proliferation Act, which had specifically authorized against sanctions on anyone trying to invest in Iranian ports, was lifted under last summer’s nuclear accord.

While U.S. sanctions remain in place against anyone engaging in transactions with Iran’s Islamic Revolutionary Guards Corps (IRGC), the official said that “there’s never been any specific evidence that Chabahar Port is controlled by the IRGC.”

India’s latest ambitions to build a new port complex on Iran coast are set to find the country a path towards needed supplies of energy, Foreign Policy magazine reported on Tuesday.

This was revealed during Indian Prime Minister Narendar Modi’s recent visit to Iran where Chabahar port deals were laid down.

The port deals will help India to establish itself in the reshaping of Central Asia’s economic and diplomatic alliances.

According to the Foreign Policy, the project deals will make India capable of bypassing Pakistan and provide Iran the opportunity to have its first deep-water port.
“It’s meant to ease access to key markets,” says Michael Kugelman, a senior associate for South Asia at the Wilson Centre.

The plan if successful will give India the access to natural gas from Iran and other Central Asian countries, as it grows to be one of the biggest energy-consuming countries in the world.

“For India, it’s about economics and energy,” Kugelman added.

But there is not only fortune for India in this programme: closer ties with Iran can make India-US relations complicated.

The United States is keeping a vigilant eye on all developments, it has been learnt by a source.

However, there is not much worry as India will only get trade ties with Iran, rather than military ties with Tehran.

It has also been said, according to the Foreign Policy, that the Chabahar port will make India resume its contact – trade’s or otherwise – with its pre-partition neighbours.

Iran's strategic port offer to help India bypass Pakistan

By Reuters
Published: July 18, 2015

Iranian President Hassan Rouhani leaves after delivering a speech at plenary session during the Asian African Conference in Jakarta April 22, 2015. PHOTO: REUTERS

Iranian President Hassan Rouhani has asked India to invest in infrastructure projects worth $8 billion, including an expanded role in developing a strategic port that will open up access to Central Asia, Iran’s envoy to New Delhi said on Friday.

The port of Chabahar in southeast Iran is central to India’s efforts to circumvent arch-rival Pakistan and open up a route to landlocked Afghanistan where it has developed close security ties and economic interests.

Rouhani suggested the larger role for India during a meeting with Prime Minister Narendra Modi on the sidelines of a summit in Russia days before the historic nuclear deal between Iran and world powers, Iran’s ambassador to India told Reuters.

“The potential between Iran and India is great but we were just facing such a wall of sanctions, wall of American pressure,” ambassador Gholamreza Ansari said.

Ansari said that with sanctions likely to be lifted soon, it was a “golden time” for India to seize investment opportunities because of the two countries’ close trade ties and shared interest in improving Central Asian transport links.

“Connectivity is the main policy of Modi that coincides with Iran’s government policy,” Ansari said. “We have offered them, in connectivy, $8 billion of projects.”

Modi’s meeting with Rouhani was part of a tour of Central Asia focused on increasing India’s role in the region.

It was not immediately clear how Modi responded to Rouhani’s offer.

India’s foreign ministry did not respond to a request for comment.

Iran and six world powers reached a nuclear deal on Tuesday, clearing the way for an easing of sanctions on Tehran.

India and Iran agreed in 2003 to develop Chabahar on the Gulf of Oman, near Iran’s border with Pakistan, but the venture has moved slowly because of the sanctions over Iran’s atomic programme.

The two countries maintained a close relationship despite the US-led trade restrictions that halved their oil trade to 220,000 barrels per day last year.

In May, India’s Shipping Minister Nitin Gadkari and his Iranian counterpart, Abbas Ahmad Akhoundi, signed an $85 million deal for India to lease two existing berths at the port and use them as multi-purpose cargo terminals.

Under the new proposal India could help build second and third terminals at the port, as well as railway connections into the rest of Iran, Ansari said.

India has moved slowly on opportunities in Iran in the past, including the giant Farzad B gas field. Ansari said India was the “first priority” to develop Farzad B, but urged New Delhi to move fast: “If they drag their feet, the market will not wait.”

Chabahar port will help India bypass Pakistan: Afghan president

By Reuters
Published: September 15, 2016

Afghan President Ashraf Ghani. PHOTO: AFP

Afghanistan President Mohammad Ashraf Ghani on Wednesday said the Chabahar agreement will help India bypass Pakistan in transporting goods to Pakistan via a sea-land route.

“Why are we so concerned that a country (Pakistan) can block two great nations (India-Afghanistan) from trade? Let’s organise it then, let’s put the logistics in place. Anyway, Chabahar will end the monopoly,” said Ghani, during his visit to India.

Ghani’s comments come at a time when ties between South Asian rivals India and Pakistan are severely hit due to the unrest in Kashmir.

Ghani, who is on a two-day visit, had bilateral talks with Indian Prime Minister Narendra Modi earlier in the day. Both leaders agreed that militancy presented the single biggest threat to peace, stability and progress in the region and beyond.

Speaking at the Institute for Defence Studies and Analyses in New Delhi, Ghani asserted that making distinction between good and bad terrorism is a “short-sighted” approach.

The Afghan state head said states should help their neighbours and not indulge in maligning them. “They (states) do not behave like maligned non states actors vis-a-vis their neighbours. They see a collective security to be an objective and that’s what brings stability. Stability does not come from the barrel of the gun,” said Afghanistan President, Mohammad Ashraf Ghani.

Pakistan has blamed India for the two-month unrest in Kashmir that has left at least 71 people dead and wounded thousands of others.

Meanwhile, New Delhi has blamed its neighbour for stoking further trouble by pushing militants across the heavily militarised border that divides the region.

India in May this year announced that it will build and operate Chabahar port and invest USD 500 million to develop the strategically important port, close to Iran’s border with Pakistan.

Earlier in the day, India and Afghanistan signed three agreements. New Delhi also announced a credit of USD one billion to Kabul.

New Delhi has provided a little over $2 billion in economic assistance to Afghanistan in the last 15 years, but has been more measured in providing weapons in order to avoid a backlash from Pakistan, which sees Afghanistan as its area of influence.

INSTC will connect the India Ocean and Persian Gulf with the Caspian Sea through Iran and then onwards to St. Petersburg in Russia and Europe.

Thursday, April 13, 2017

Dry Run for India-Iran-Russia Transport Project

The plan is to move goods from Indian ports to Iran’s Bandar Abbas Port by sea and then to the Iranian port of Bandar Anzali by road and from there to the Russian port of Astrakhan by sea. The goods would then be transported into Russian Federation and Eu .INSTC is much shorter than the current route, which runs through the Suez Canal and the Mediterranean Sea.

India is pulling out all stops to operationalize the International North-South Transport Corridor with a dry run planned for Thursday.

The second such dry run is aimed at ironing out the creases in the ambitious multimodal transportation project involving Iran, Russia and India, and comes in the backdrop of China’s "One Belt, One Road" initiative, the Indian newspaper Mint reported on its website.

While the Chinese strategy is aimed at connecting some 60 countries across Asia, Africa and Europe to boost trade and economic ties along its traditional maritime route, INSTC will connect the India Ocean and Persian Gulf with the Caspian Sea through Iran and then onwards to St. Petersburg in Russia and northern Europe.

The plan is to move goods from Jawaharlal Nehru and Kandla ports on India’s west coast to Bandar Abbas Port in the south of Iran by sea. From Bandar Abbas, the goods will be transported to the Iranian port of Bandar Anzali on Caspian Sea by road and from there to the Russian port of Astrakhan by sea. The goods would then be transported into Russian Federation and Europe by Russian railroads.

According to Indian government officials, INSTC can reduce the time and cost of deliveries by 30-40%. It is much shorter than the current route, which runs through the Suez Canal and the Mediterranean Sea.

Goods transported through the Suez take 45-60 days to reach Europe, compared to INSTC’s 25-30 days.

The potential of this corridor will be manifold for India if it is linked further with Southeast Asian countries. This can boost trade between Europe and Southeast Asia as well.

A senior Indian government official, requesting anonymity, said at present India depends on the sea route via Rotterdam to St. Petersburg. To reach out to Central Asia, goods have to be routed through China, Europe or Iran.

The routes through China and Europe are long, expensive and time consuming. This calls for the need for a route that is relatively shorter, cheaper and safe.

“The corridor will help India bypass Pakistan to reach Central Asia and Russia and potentially get a competitive advantage due to lower cost and shorter delivery time,” the official added.

Another Indian government official, who also didn’t wish to be identified, confirmed the development.

First Dry Run Experience

The first dry run was conducted in August 2014 by the Federation of Freight Forwarders Association in India.

The dry run report stated, “The proposed INSTC route, via Bandar Abbas in Iran to Russia and the Commonwealth of Independent States destination in transit through Iran, could be the best route with optimal transit/cost for Indian exporters/importers.”

Queries emailed to the spokespersons for India’s ministries of road transport and highways, and external affairs remained unanswered.

India is moving ahead with its plans of accessing transnational multimodal connectivity to articulate its role in the proposed transportation architecture in the region and beyond.

This follows India’s decision to become the 71st signatory to Transports Internationaux Routiers or International Road Transports Convention—an international transit system designed to facilitate the seamless movement of goods throughout these countries in Asia and Europe.

Need to Leverage Chabahar

“The streamlined international system for the movement of goods by road and other modes will, in particular, enhance India’s International ‘North-South’ Transport Corridor, a key trade route between Central Asia and the Commonwealth of Independent States in the north, and southern ports in India and beyond, such as Chabahar in Iran,” IRU, the world’s road transport organization, said in a statement on March 7.

Experts say India should leverage Chabahar to make INSTC a viable proposition.

“We have to make best use of Chabahar, which can open the entire Central Asia to us,” said Saurabh Chandra, former secretary in the Department of Industrial Policy and Promotion.

India plans to develop Chabahar Port in Iran, which will allow access to landlocked Afghanistan and energy-rich Central Asia through the Jawaharlal Nehru and Kandla ports on India’s west coast. In addition, India has built a 218-km road link connecting Delaram with Zaranj in Afghanistan, which is adjacent to Iran’s border.

Indian Railways also plans to set up a Trans-Asian Railroad route of Dhaka-Kolkata-Delhi-Amritsar-Lahore-Islamabad-Zahedan-Tehran-Istanbul.

Besides, India has been instrumental in implementing the India-Myanmar-Thailand Highway, along with the Bangladesh-Bhutan-India-Nepal Motor Vehicles Agreement.

Progress on Iranian Side

Last month, Iran, Russia and Azerbaijan agreed to reduce tariffs on interstate cargo transit by 50%, as part of efforts to activate INSTC.

The agreement was reached in a trilateral meeting on March 7 in Moscow where rail officials from the three countries discussed ways of activating the INSTC project.

An official with the Islamic Republic of Iran Railways, Hossein Ashouri, was quoted as saying by Mehr News Agency that all sides hope to activate the corridor later in 2017.

Islamic Republic of Iran Railways is currently building a railroad from the Iranian Caspian port city of Astara to the border with Azerbaijan, from where it will be extended to another city also named Astara in Azerbaijan.

A completed section of the railroad was tested early March after a train set off on a maiden journey from Azerbaijan’s Astara. The train travelled 8 kilometers to the border from where it entered the Iranian section of the route.

According to Younes Ranjkesh, governor of the northeastern Iranian port, Iran has started laying tracks on the Iranian section and in the first phase, track-laying for 0.6 kilometers will be carried out.

The Astara-Astara project includes a bridge on Astarachay River stretching along the border, which was built by Azerbaijan.

Azerbaijan has agreed to invest $500 million to build the railroad that is one of the main links in INSTC.

Another missing link is a route from Qazvin to Rasht. The construction of this section is in the final stage. The route includes Iran’s biggest rail bridge with a length of 1.43 km on Sefidroud river in the city of Manjil in Gilan Province.

Despite a missing rail link from Rasht to Astara, the Islamic Republic will use a multimodal transport system from its southern ports to Astara until the incomplete rail connection is added to the pathway.

Chabahar Port: Strategic necessity for India

By Bharat Shakti

Chabahar is definitely an opportunity for Iran, Afghanistan and India. Located close to Gwadar, it provides India an avenue to extend its reach and contest the emergence of China as the predominant influence in the region.

In terms of capacity, the port is much smaller in design as compared to Gwadar, but with investments being more limited its viability is definitely greater.

For India, it provides a routing to Afghanistan without having to pass through Pakistan. The author provides an evaluation of the project both from the strategic and also the economic viewpoint.

Located in close proximity to Afghanistan and the Central Asian countries of Turkmenistan and Uzbekistan, Chabahar Port has been termed as the 'Golden Gate' to these landlocked countries.

Iran-India partnership

Iran invited India in 1990s to develop the Chabahar Port to obtain a land access into Afghanistan. This was followed by a trilateral agreement in 1997 with Turkmenistan to expand trade into Central Asia followed by another agreement with Russia to provide seamless transport between India and Europe via an International North South Transport Corridor.

India agreed to expand the Chabahar port and to lay a railway track between Chabahar and Zaranj.

India spent $134 million during 2005 to 2009 to construct a road from Delaram in Afghanistan to Zaranj at the Iran Afghanistan border. Iran has completed first phase of the Chabahar Port at a cost of $340 million.

Connectivity from Chabahar through Milak, Zaranj and Delaram has been established to the Garland road in Afghanistan which connects the major Afghan cities Herat, Kandhar, Kabul and Mazar-e-Sharif.

In March 2012, ships from India docked at Chabahar carrying 100,000 tons of wheat under humanitarian aid to Afghanistan. However, without further development of the port the roads remained unutilized.

In May 2016, India signed a series of 12 memorandums of understanding pertaining to the port of Chabahar. The most important one pertains to the deal between Iran and India which permits India to develop and operate two berths of the Chabahar Port for 10 years.

This will be done by India Ports Global — a joint venture between Jawaharlal Nehru Port Trust and Kandla Port Trust in partnership with Iran's Aria Banader.

The company has guaranteed handling of 30,000 twenty foot equivalent units (TEUs) ships on completion of two years and eventually reaches a figure of 250,000 TEUs. The berths will be developed at a cost of $85 million. A container handling facility of 640 meters will be constructed and reconstruction of the existing 600 meters container handling capability in the second berth will be taken up. All these will be fitted with modern port handling equipment. This would result in the port handling capability of Chabahar being enhanced from 2.5 million tons to 8 million tons.

It is pertinent to note that the investment is supplemented with a $150 million line of credit to Iran through the Exim Bank of India. Apart from this, a memorandum of understanding was also signed for the financing of the planned Chabahar–Zahedan railway line as a part of the North South Transport Corridor by Indian Railways construction unit — Ircon International.

The offer entails providing the cost of $1.6 billion. This would enable Chabahar to be linked to Afghanistan and Russia by rail.

Strategic necessity

As per political observer Aagam G Shah's statement in quora.com, the reason for Indian economic and geopolitical involvement with Iran is to counter the influence of China's string of pearls strategy. The advantages that would accrue are:

● It will provide a land route to Afghanistan, Iran, Central Asia and Russia. In doing so it will make way for India to bypass Pakistan in transporting goods to Afghanistan using a sea land route. At present Pakistan does not allow India to transport goods through its territory to Afghanistan.

● It would give momentum to the International North-South Transport Corridor of which both are initial signatories. It entails the ship, rail and road routes for moving freight between India, Russia, Afghanistan, Central Asia and Europe.

● It would counter the Chinese presence in the Arabian Sea through the support to Pakistan in developing Gwadar port. Further it would enable our shipping vessels to be provided security if the need arises in the region.

● All these leads to the development of the region and with iron ore deposits available it could result in a steel plant being opened in this region. This would see the region developing economically apart from being a communication hub.

The other important issue is the Japanese interest in developing Chabahar. Japan's State Minister for Foreign Affairs Kentaro Sonoura during a visit to Afghanistan in January 2017, pledged to develop access to Chabahar.

Japan's interest in Chabahar is important to India as the assistance would ensure time-bound completion of the port leading to timely optimization of facilities.

Japan is an important strategic partner of India and its support would be essential in countering Chinese influence in Gwadar.

India is playing an important strategic role in Afghanistan. Currently India is training the Afghan National Army and providing limited military equipment. We are undertaking Capacity Development for which material both civil and military needs to reach Afghanistan. Chabahar provides connectivity and this in turn provides multiple strategic options. Apart from move of equipment, we could plan training exercises initially at a small scale and later at a larger scale between the two armies.

Way ahead

Undoubtedly the development of Chabahar port would be a game changer for the region. Apart from countering the Chinese port of Gwadar, the route would possibly eliminate the term 'strategic depth' from the lexicon of the Pakistan Armed Forces.

It is hoped that the Iranian government completes the application for the $150 million loan and forwards it to the Exim Bank of India. Thereafter, Indians can move expeditiously. India would be able to extend its reach as a regional power, too.

It is extremely important that India connects on a direct route to Afghanistan without having to go through Pakistan to exercise its strategic options. Such a routing also provides a passage to the Central Asian Republics. Chabahar provides us this great opportunity and we must leave no stone unturned to turn this concept into a reality.

Chabahar: The ‘missing’ link to Eurasia

15 September 2015 DEBIDATTA AUROBINDA MAHAPATRA, SPECIALLY FOR RIR

Officials from India, Iran and Russia recently met in New Delhi and approved draft transit and customs agreements for the International North South Transport Corridor (INSTC). The three countries and ten other countries, from Central Asia, the Gulf and East Europe forming the INSTC coordination council, met and approved draft agreements which will provide a legal basis for freight movement in Eurasia.

A general view of the Kalntari oil dock of the Sea of Oman near the strait of Hormuz in the city of Chabahar, south-eastern of Iran. Source:EPA

The southeastern Iranian port Chabahar is a crucial link in the INSTC. India signed an agreement with Iran in May 2015 to develop this port. The multimodal transport link, when operationalized, will galvanise Eurasian trade.

India’s Transport Minister, Nitin Gadkari visited Tehran to give concrete shape to the Chabahar development project, conceived over a decade ago but stalled due to international sanctions on Iran. With the sanctions girdle set to loosen, India’s involvement in developing the port will be crucial. Chabahar will be connected to Milak, close to the Afghan border, and into Afghanistan through the Indian built Zaranj-Delaram highway. This section is part of the broader INSTC project that links Eurasian nations, from Russia in the north to India in the south, through Central Asia. The corridor can further be linked to the Silk Road, and other networks of roads linking China to Europe.

Though estimates vary, transport costs and duration will be minimized when this corridor becomes operational. According to Gadkari, “It is expected that cargo by this route (INSTC) would reach Russia in about 25-30 days as against the present route through Suez which takes about 45-60 days”. During his visit to Russia earlier in May 2015, Indian President also referred to this transport corridor.

The $85 million Indian investment in Chabahar will provide India a ten year lease of two berths, one of which will be used for container traffic and the other for multipurpose cargo at the site.

During his visit to Russia in July 2015, for the BRICS and SCO summits, Indian Prime Minister Narendra Modi raised the corridor issue with leaders of Russia and Central Asia. Earlier, in June, a stakeholders’ conference in Mumbai by India’s Commerce and Industry Ministry and Federation of Freight Forwarders’ Associations in India (FFFAI) discussed the issue. Iranian Foreign Minister, Javad Zarif, visited India last month and met his Indian counterpart, Sushma Swaraj, Gadkari and Prime Minister Modi to discuss bilateral cooperation, including Chabahar port and the INSTC.

Commenting on Zarif’s visit, Indian Foreign Ministry spokesperson Vikas Swarup said, “We are at an advanced stage in two ongoing projects related to Chahbahar and the International North South Transport Corridor (INSTC).” Zarif told reporters, “I believe sooner rather than later we will start serious work.” Both sides also discussed energy cooperation and transforming the relationship from a buyer-seller relationship to a ‘genuine energy partnership.’ Iran has offered to build a rail link from Chabahar to Zahedan, capital of its Sistan-Baluchistan province, as part of the larger INSTC project.

Pakistan does not provide India overland access to Afghanistan. Development of Chabahar will provide India access to Afghanistan and other Central Asian countries. Particularly in Afghanistan, it will help India carry forward its humanitarian work, and help build Afghan forces and democratic structures for a more stable Afghanistan. It will help India to access energy resources in Iran and Central Asia and help turn Eurasia into a hub of economic cooperation.

A comprehensive economic partnership agreement between India and Eurasian Economic Union will increase economic cooperation in the region and give a boost to India’s connect Central Asia policy. India’s investment in Chabahar will also help counter maritime piracy and tackle other mishaps and disasters at sea.

A zero sum perspective and compartmentalization keeps relations confined to a narrow realm of geopolitics at the cost of economic advantages. India’s involvement in Chabahar can complement China’s involvement in Gwadar. The two ports are located at a distance of about 72 kilometers. A mutual understanding between India, Pakistan, Iran, China and Russia will not only be mutually beneficial, but also help in giving concrete shape to projects languishing long such as TAPI and IPI. At present it appears difficult. Sunni dominated Pakistan has differences with Shia dominated Iran. The decades old Indo-Pak rivalry over Jammu & Kashmir, and India-China border differences have contributed to a tunnel vision.

India and Iran share huge cultural capital. The two countries shared a long history of trade through the ancient Silk Road. Once the sanction regime is totally over, Iran’s relations with BRICS countries will likely flourish.

Dr. Debidatta Aurobinda Mahapatra is an Indian commentator. His areas of interests include conflict, terrorism, peace and development, South Asia, and strategic aspects of Eurasian politics.

Iran: India's Gateway to Central Asia

Meena Singh Roy

Pages 957-975 Published online: 23 Nov 2012

Abstract

Most of the discourses on India–Iran relations are either focused on cultural and civilisational links with Iran or its relevance as an energy-rich nation. Its transit potential in providing India with access to Central Asia has not received adequate attention. While there is a general acceptance that Iran provides India with access to Central Asia, what is little known and thus not analysed is the question: to what extent has India been able to realise Iran's transit potential and what are the major bilateral, regional and international challenges faced by both these countries for realising that potential? The article argues that despite Iran's geostrategic location as well as regional complexities, the Iran–US standoff, security challenges and lack of adequate economic resources constrain India's efforts to maximise the potential offered by the various land, sea and rail routes connecting India to the Eurasian region through Iran. A new thrust by all regional partners supported by international agencies to revive old links and build new corridors therefore becomes necessary.

Western manufacturers are shying away from supplying equipment for an Iranian port that India is developing for fear the United States (US) may reimpose sanctions on Tehran, Indian officials say, dealing a blow to New Delhi's strategic ambitions in the region.

Lying on the Gulf of Oman along the approaches to the Straits of Hormuz, the port of Chabahar is central to India's hopes to crack open a transport corridor to Central Asia and Afghanistan that bypasses arch-rival Pakistan.

India committed $500 million to speed development of the port after sanctions on Iran were lifted following a deal struck between major powers and Tehran to curb its nuclear programme in 2015.

But the state-owned Indian firm that is developing Chabahar is yet to award a single tender for supplying equipment such as cranes and forklifts, according to two government sources tracking India's biggest overseas infrastructure push.

US President Donald Trump denounced the nuclear agreement on the campaign trail, and since taking office in January has accused Iran of being a threat to countries across the Middle East.

Swiss engineering group Liebherr and Finland's Konecranes and Cargotec have told India Ports Global Pvt Ltd, which is developing the deep water port, they were unable to take part in the bids as their banks were not ready to facilitate transactions involving Iran due to the uncertainty over US policy, the two officials said in separate conversations with Reuters.

These firms dominate the market for customised equipment to develop jetties and container terminals. One official said the first tender was floated in September, but attracted few bidders because of the fear of renewed sanctions. That fear has intensified since January.

“Now the situation is that we are running after suppliers,” one official said, speaking on condition of anonymity because of the sensitivity of matter.

A Konecranes spokeswoman declined to comment beyond confirming the company was not involved in the project. Cargotec and Liebherr did not respond to requests for comment.

Some tenders have been floated three times since September because they failed to attract bidders. A Chinese firm, ZPMC, has since come forward to supply some equipment, the same Indian official said.

Threat of sanctions

Trump has called the agreement between Iran and six major world powers restricting Tehran's nuclear programme in exchange for lifting of sanctions “the worst deal ever negotiated”.

Last month his administration extended relief on Washington's broadest and most punitive sanctions, while carrying out a wider policy review on how to deal with Iran.

Uncertainty over US policy is already causing long delays in contracts that Iran has sought with international firms to develop its oil fields and buy planes for its ageing airlines.

The lifting of United Nations and European Union sanctions in 2016 partly reconnected Iran with the international financial system crucial to trade.

But large international bankers with exposure to the United States remain unwilling to facilitate Iranian deals for fear of running afoul of narrower, unilateral US sanctions that remain outside the nuclear deal and uncertainty over whether wider sanctions relief will continue.

India's ambassador to Iran said the process of procuring equipment for the Chabahar port was under way and that some of the customised cranes needed take up to 20 months to build. The banking situation was slowly improving, he added.

“Tenders are re-floated for a variety of reasons including technical specifications not being met, etc. Banking channels, in recent months, have in fact somewhat eased,” Saurabh Kumar said in an emailed response to Reuters from Tehran.

“If some companies do not participate, it really is their business,” he added.

India has been pushing for the development of Chabahar port for more than a decade as a hub for its trade links to the resource-rich countries of central Asia and Afghanistan.

Access to those countries is currently complicated by India's fraught relationship with Pakistan.

Bureaucratic delays, difficult negotiations with Iran and the risk of incurring Washington's displeasure during the financial embargo in Tehran had meant there was little progress on the port until now.

But, prodded in part by China's development of Gwadar port, which lies barely 100 km from Chabahar on the Pakistani coast, Indian Prime Minister Narendra Modi's government has unveiled massive investment plans centred around the Iranian port, offering to help build railways, roads and fertiliser plants that could eventually amount to $15 billion.

So far, even an initial credit line of $150 million that India wants to extend to Iran for development of Chabahar has remained a non-starter as Tehran has not been able to do its part of work.

“They have not sought the loan from us because they haven't awarded the tenders, either because of lack of participation or banking problems,” said the second government official.

Ambassador Kumar said the Iran had indicated it would be sending proposals shortly to tap the credit line.

Meena Singh Roy, who heads the West Asia centre at the Institute for Defence Studies and Analyses, a New Delhi think-tank, said increasing tension between Washington and Tehran would have an impact on the port project.

“The Chabahar Project has strategic significance for India,” she said.

“However ... nothing much seems to be moving due to new uncertainties in the region.”

US lawmakers question Indian plans for Iran's Chabahar port

Reuters
May 24, 2016

WASHINGTON: US Senators questioned on Tuesday whether India's development of a port in southern Iran for trade access risked violating international sanctions, and a State Department official assured them the administration would closely examine the project.

“We have been very clear with the Indians (about) continuing restrictions on activities with respect to Iran,” Nisha Desai Biswal, Assistant Secretary of State for South and Central Asian Affairs, said on Tuesday.

“We have to examine the details of the Chabahar announcement to see where it falls in that place,” she testified to the Senate Foreign Relations Committee.

Indian Prime Minister Narendra Modi on Monday pledged up to $500 million to develop the Iranian port of Chabahar, to try to give his country trade access to Iran, Afghanistan and Central Asia. The route is currently all but blocked by Pakistan, long at odds politically with India.

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The United States and Europe lifted sanctions in January under a deal with Iran to limit its nuclear program but some restrictions to trade remain, tied to issues such as human rights and terrorism.

Biswal said she believed India's relationship with Iran was primarily focused on economic and energy issues, and said the administration recognized India's need for a trade route.

“From the Indian perspective, Iran represents for India a gateway into Afghanistan and Central Asia,” she said. “It needs access that it doesn't have.”

Biswal said she had not seen any sign of Indian engagement with Iran in areas, such as military cooperation, that might be of concern to the United States.

Modi is due to visit the United States next month and will address a joint meeting of Congress, a rare honor.

Senator Ben Cardin, the committee's top Democrat, asked if Biswal expected formal security cooperation agreements to be signed during that visit.

She noted that India and the United States have already strengthened their security cooperation in several areas. “We're looking at what additional areas we can engage in to deepen that cooperation,” Biswal said.

Washington sees its relationship with India as critical, partly to counterbalance China's rising power. President Barack Obama has called it “one of the defining partnerships of the 21st century.”

The trilateral engagement between India, Iran and Afghanistan during the visit of Prime Minister Narendra Modi to Iran in May 2016 expanded avenues of trade for India with Iran, Afghanistan, Central Asia and Russia through the International North South Transportation Corridor (INSTC). Chabahar, Iran’s only oceanic port, consists of two separate ports named 'Shahid Kalantari' and 'Shahid Beheshti' — each of which have five berths.

India and Iran first agreed upon plans to further develop 'Shahid Beheshti' port in 2003, but India was deterred by sanctions against Iran. Under the India-Iran agreement of May 2016, India is to refurbish one of the berths at 'Shahid Beheshti', and reconstruct a 600-metre-long container handling facility at the port. The bilateral agreement between India and Iran gives India the right to develop two berths of Chabahar as agreed in 2015, allowing them to be operated for 10 years by India Ports Global — a joint venture between Jawaharlal Nehru Port Trust and Kandla Port Trust, in partnership with Iran's Aria Banader.

Along with the development of Chabahar Port, India is also to construct a railway line linking Chabahar with Zahedan on the Iran-Afghanistan border, which beyond Zahedan will be linked to the Iranian Railway running west and then north close to the Iran-Afghanistan border, avoiding the volatile Helmand Province of Afghanistan. India’s development of Chabahar will be at a cost of $85 million over the course of 18 months. Upon completion of upgrade work agreed to in May 2016, Chabahar's capacity will be increased to eight million tonnes from the current 2.5 million-ton capacity.

File image of Chabahar Port. Reuters

India’s investment is supplemented with a $150 million credit line to Iran through Exim Bank of India. India has also offered to supply $400 million worth of steel towards the construction of the rail link between Chabahar-Zahedan. Chabahar Port and the INSTC give India the strategic access for trade with Afghanistan and Eurasia, faced with denial of the land route through Pakistan.

Prior to the Indo-Iranian agreement on Chabahar, Iran had offered the same project to China and Pakistan also in addition to India, with China, Pakistan not responding. Iranians grudge that India agreed to develop Chabahar in 2003 but despite US being amenable to India doing so, India remained complacent. However, it did emerge in 2015 that there were problems in clearing backlog payments for imported Iranian oil even through European banks because of the sanctions.

But the fresh agreement of May 2016 implies that India should complete the project within the stipulated 18 months — by November 2017. However, this appears impossible with US-Iran relations gone sour and the threat of sanctions by the Trump administrations. Trump has called the agreement between Iran and six major world powers restricting Tehran's nuclear program in exchange for lifting of sanctions "the worst deal ever negotiated".

India committed $500 million to speed up development of Chahabar after sanctions on Iran were lifted but India’s Ports Global Pvt Ltd has not been able to award a single tender for cranes and forklifts etc. Swiss engineering group Liebherr and Finland's Konecranes and Cargotec, both of which dominate the market for customised equipment to develop jetties and container terminals, maintain they are unable to take part in the bids as their banks are not ready to facilitate transactions involving Iran due to the uncertainty over US policy. The lifting of UN and EU sanctions in 2016 partly reconnected Iran with the international financial system but large international bankers remain unwilling because of the US stance, especially due to possibility of unilateral US sanctions that may be imposed irrespective of the nuclear deal.

There is little progress on the Iranian side as well; even an initial credit line of $150 million that India wants to extend to Iran for development of Chabahar has remained a non-starter as Tehran has not been able to do its part of the work. So, the 18-month deadline for completion is impractical, especially with the Indian Ambassador to Iran stating that "some of the customised cranes needed take up to 20 months to build".

In 2011, Beijing and Tehran signed a deal giving China exclusive rights to multiple several Iranian oil and gas fields through 2024, including rights to build necessary infrastructure. In return, China promised to treat any foreign attack against these regions as attacks against its own sovereign territory, and defend them as such. China needs no prior permission from Iranian government to maintain and increase its military presence in Iran, and will control the movement of Iranians in and out of these territories.

According to Green Experts of Iran, this agreement was the basis for PLA’s General Zhang Zhaozhong stating, "China will not hesitate to protect Iran even with a Third World War." China and Iran aim to increase bilateral trade to $600 billion within the next decade, even though economists feel it is not attainable. Just last week, the Chinese and Iranian navies undertook joint exercise in the strategic Straits of Hormuz, preceded by a China-Pakistan joint naval exercise off the coast of Karachi.

According to James M Dorsey, senior fellow at the S Rajaratnam School of International Studies in Singapore, the Donald Trump administration appears to take be getting ready to back Saudi Arabia and the UAE to destabilise Iran, possibly topple its Islamic government and force Qatar to fall into line with Gulf policies that target Iran. If that were to happen, the US in all probability may re-impose unilateral sanctions.

This would adversely affect India’s development of the Chabahar Port and consequently trade with Afghanistan, Central Asia and beyond through the INSTC. India will need to find a way to continue developing the Chahabar Port even in the event of fresh sanctions against Iran. This will require sustained high-level diplomacy including perhaps discussion of the issue between Modi and Trump.

Despite Trump’s Threats to Iran, India Must Push Ahead on Chabahar

BY SUMITHA NARAYANAN KUTTY 16/02/2017

There is limited interest to ‘tear up’ the Iranian nuclear deal in Washington. Even as New Delhi monitors these moves closely, it should consider a coordinated approach with Asian partners who continue to engage with Iran.

Prime Minister Narendra Modi shakes hands with Iranian President Hassan Rouhan. Credit: PTI
The Trump administration’s recent move to sanction dozens of Iranian entities has raised concerns in India, specifically over the future of the Chabahar port project. These apprehensions are justified given the strategic significance of the southern Iranian port, which will enable India to bypass Pakistan and gain direct access to Afghanistan, Central Asia and Europe.

This proposal has taken over a decade to materialise and any move by the new US government to discourage economic engagement with Iran would throw a spanner in the works.

Therefore, it would be in New Delhi’s best interests to safeguard its proposed investments in Chabahar and convey to Washington that Iran’s most important strategic and economic partners – including Russia, China, Japan and South Korea – would not like to see the Iranian nuclear deal unravel.

Trump’s choices: deal, new deal or no deal?

Despite his Twitter rhetoric, Trump’s new sanctions against Iran are not exactly new. This policy is in line with that of the Obama administration to keep a strict check on Iran’s behaviour through non-nuclear sanctions even after the nuclear deal.

Non-nuclear sanctions include those against Iranian or related entities and individuals who support terrorism, human rights violations and, as in the latest case, the country’s ballistic missiles programme. They are separate from the sanctions that were lifted as per the Iranian nuclear deal, the future of which is undoubtedly of great concern today.

The Iranian nuclear deal, or the Joint Comprehensive Plan of Action, reached in 2015, was negotiated between Iran and the P5+1 countries – the US, Russia, China, the UK, France and Germany – and was facilitated by the European Union (EU). The Trump administration has repeatedly indicated that it plans to force the Iranians back to the table to renegotiate “the worst deal ever negotiated”.

However, there is zero appetite for renegotiations. The EU’s Vice President Federica Mogherini, who coordinates the joint commission that implements the deal, has confirmed as much and so has Iran’s President Hasan Rouhani, who labelled such talks “meaningless”.

The Russians find such a move “risky” and have advised Trump to “not try to fix what is not broken”. The British, while raising concerns over Iran’s behaviour, have opined that the deal be properly enforced and policed. And finally, China has interestingly been the loudest on this matter since it was hit by the latest US unilateral sanctions (three Chinese companies and three Chinese individuals were on the list). Beijing has now warned the US that such moves “will not help in enhancing trust.”

More importantly, there is very little appetite to return to the past scenario of multilateral economic sanctions against Iran. This realisation seems to have dawned on the Republican camp and, if shared across the administration, would prove helpful in preserving the deal.

Paul Ryan, the speaker of the US House of Representatives, has stated that the deal is very likely to stay in place, “I don’t think you’re going to go back and reconstitute the multilateral sanctions that were put in place.” Trump also appears to now be talking about “rigorously enforcing the deal.” In a recent interview, when he was specifically asked whether he would tear up the deal, he remained non-committal.

On red flags and a coordinated approach

This brings us to how New Delhi could prepare and proceed on the matter. What red flags should the Modi government watch out for and in what ways can it safeguard India’s proposed investments in Iran going forward?

New Delhi should specifically look for announcements from the US Treasury targeting the Iranian port operator Aria Banader Iranian Co., which has partnered with Indian Ports Global Pvt. Ltd. to develop the Chabahar port.

This private company, according to Iran’s Ports and Maritime Organisation, currently also operates a terminal in the Anzali port facing the Caspian Sea.

In the past, a port operating company, Tidewater, believed to be functioning in Bandar Abbas and owned by Iran’s Islamic Revolutionary Guard Corps (IRGC), was blacklisted in 2011, making it difficult to conduct trade through the port. The company remains in the list but the secondary sanctions on Bandar Abbas have been lifted as per the nuclear deal.

If Aria Banader was found to have linkages with the IRGC – which is unavoidably deeply engaged in Iran’s key sectors – or other blacklisted individuals by Washington, it would be highly problematic for India. This could indeed have been one of the reasons that upset New Delhi when the Iranian government failed to mention they had leased the port to the private firm at the signing of the MoU in 2015. It meant spending additional time on the due diligence and vetting of its new business partner in Chabahar.

A second proposition for the Modi government to consider is widening consultations with Asian partners who have invested or are considering investments in Iran, specifically in Chabahar. New Delhi is already working with Japan on this matter and should consider including South Korea as well.

Japanese Prime Minister Shinzo Abe was one of the first world leaders to call on Trump in November when he won the presidential election, and last week met him again to shore up the Japan-US alliance. It was also within these same months that the Japanese deputy foreign minister announced in Kabul that the country had reached an agreement with New Delhi to expand the Chabahar port in Iran and promised to help boost Afghan trade in the region. This could indicate that the Japanese have taken this calculated decision to proceed with investments in Iran after having consulted or engaged on the subject in some form or fashion with Washington.

Last year, the South Korean steelmaker POSCO agreed to jointly build a steel plant in Chabahar’s Free Trade Zoneand use it as a springboard to more investments in Iran. Other Korean companies have also signed MoUs on electricity-generation and desalination plants in the coastal city.

Joint consultations with Japan and South Korea, who are also US allies, are increasingly becoming the need of the hour as Iran and the US indulge in escalation.

Here’s why – the US and Iran are no longer talking to each other. They are back to talking at each other.

This is a significant change – or perhaps, a return to the status quo – going forward. The direct and functional channel of communication that existed between former US Secretary of State John Kerry, Iranian foreign minister Javad Zarif and their teams looks difficult to replicate with the Trump administration.

Trump’s latest moves against Iran won’t unravel the Iranian nuclear deal just yet. And the Modi government’s Budget allocation for the Chabahar port project demonstrates that it aims to move forward on it and is not entirely risk averse. It must, therefore, strategise to ensure its interests in Iran are protected when engaging with it becomes tricky.

Together with Tokyo, Seoul and other like-minded partners, New Delhi can drive home the point in Washington that there is greatly reduced appetite for multilateral sanctions against Iran, which are in clear violation of the nuclear deal. It needs to also underscore the reality that it will be a much harder task to wrestle Iran back into the ‘sanctions box’.

New Delhi cannot afford to stand by mutely while its strategic ambitions come undone for a second time.

New York: Washington broadly supports India and Afghanistan signing a deal with Iran for a transport corridor opening up a new route to Afghanistan via the Iranian port of Chabahar, as it outflanks the $46-billion China-Pakistan Economic Corridor project with Gwadar as its focal point.

Analysts say Washington is acutely aware that China's plans to develop Pakistan's southern coastal fishing town of Gwadar into an economic hub, potentially redraws the region’s geopolitical map. It gives China a new trade link from its relatively undeveloped west to key Arabian Sea shipping routes at the mouth of the oil-rich Persian Gulf — giving it potentially strategic as well as economic leverage.

File image of Pakistan's Gwadar Port. AFP

"The massive Gwadar project reveals China's regional power play. There is no comparison in scale and intent between China’s role in Gwadar and India’s in Chabahar, but the Americans are pleased that India is pushing back against the Chinese expansionist mindset," said author and South Asia expert Adam V Larkey.

"The transport corridor will open up a much-needed independent route to Afghanistan via Iran's Chabahar port circumventing Pakistan. This is significant for India and Afghanistan, whose economic stability in turn, is important to the United States. There are fissures in Pakistan’s relations with the US and Afghanistan, while its ties with old friend China remain rock solid," added Larkey.

The Gwadar project is about more than simple trade — its backers hope that once finished, it will bolster Pakistan's economy and potentially give China's navy access to the Indian Ocean. The plan would also strengthen both China and Pakistan's positions versus India, and hedge against US influence in Asia.

India's Chabahar investment has been pending for years, in part owing to US sanctions against Iran over its nuclear program, many of which were lifted earlier this year. New Delhi will invest $200 million to develop two terminals and five berths at Chabahar.

Gwadar is being built as a commercial port and not as a naval facility for China’s navy — at least for the time being, but it could potentially be developed as one in the future. Situated on a barren, hammerhead-shaped peninsula in the south of insurgency-ridden Balochistan — and just north-east of the strategically important Straits of Hormuz — Pakistan's generals and China's politicians predict the development of Gwadar will be a game-changer.

It would give China a firm and reliable long-term beachhead in the Indian Ocean and close to the Persian Gulf, "effectively making it a two-ocean power," said Claude Rakisits, a senior fellow at the Atlantic Council.

Some US senators were caught off guard by the announcement of the Chabahar port deal, but the Obama administration has batted for India.

"For India to be able to contribute to the economic development of Afghanistan, it needs access that it does not readily have across its land boundary. And India is seeking to deepen its energy relationship with the Central Asian countries and looking for routes that would facilitate that," assistant secretary of state for South Asia Nisha Desai Biswal told the Senate foreign relations committee on Tuesday.

Biswal assured the senators that the Obama administration has been "very clear with the Indians what our security concerns have been and we would continue to engage them on those issues".

Chabahar port may be opened next year: Indian minister

NEW DELHI: The Indian government is hopeful that the strategic Chabahar port in Iran will be operational by 2018, Union minister Nitin Gadkari has said.

India’s minister for transport, highways and shipping was in Tehran on Saturday in connection with the inauguration of President Hassan Rouhani’s second term in office.

Prime Minister Narendra Modi had earlier congratulated Rouhani on his re-election as the president of Iran and affirmed India’s commitment to strengthen the “special relations” between the two countries.

“India and Iran have been historically sharing special ties... We are keen on developing Chabahar port and are hopeful of starting operations in 12 to 18 months,” Gadkari said.

Chabahar port, located in the Sistan-Baluchestan pro¬vi¬nce on the energy-rich Persian Gulf nation’s southern coast, can be easily accessed from India’s west coast, bypassing Pakistan.

Gadkari’s visit has assu¬med significance as India has accelerated work at the Chabahar port and finalised some tenders for installation of key equipment there.

“Civil construction work has started there. We have finalised tenders worth Rs:3.8 billion for equipment out of Rs:6bn and once the port becomes operational it will become a growth engine,” the minister said.

Gadkari said he was also hopeful of certain approvals from the Iranian government for expediting work and add¬ed that once Chabahar be¬came operational trade and business between the two countries would see a boost.

For greater trade and investment flow with Iran and neighbouring countries, the Indian cabinet last year approved proposals for development of Chabahar port, including a $150 million credit from Exim Bank.

According to the MoU signed by the two countries in May last year, India is to equip and operate two berths in Chabahar Port Phase-I with capital investment of $85.21m and annual revenue expenditure of $22.95m on a 10-year lease.

Ownership of equipment would be transferred to Iranian side on completion of 10 years or for an extended period, based on mutual agreement.

As per the accord, operations of two berths are to commence within a period of 18 months after the signing of the contract.

Besides the pact to dev¬elop the port, for which India will invest $500m, a trilateral Agreement on Trans¬port and Transit Corridor has also been signed by India, Afghanistan and Iran.

In 2003, the two sides had agreed to execute the project, bypassing Pakistan, but the venture made slow progress due to Western curbs on Iran over its controversial nuclear programme. The port’s expansion is expected to whittle down transport costs and cut freight time from India to Central Asia and the Persian Gulf.

Chabahar provides India an easier land-sea route to Afghanistan, where it has fostered close security cooperation and economic interests over the years. New Delhi has already spent $100 million on building a 220-kilometre road in the Nimroz province of Afghanistan. The road will be extended to Chabahar.

Chabahar provides India an easier land-sea route to Afghanistan.

Afghanistan is expected to sign a tripartite transit trade agreement on using the port as an alternative route, which could jack up bilateral trade to $3 billion from $700-800 million.

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The project’s strategic nature is illustrated by its location along the coast from the Chinese-funded Gwadar port in Balochistan. Noting the prospect of sanctions on Iran being lifted or eased, India plans to fast-track the plan.

Modi’s sense of urgency in concluding trade pacts with Iran and other Persian Gulf nations is apparently driven by Chinese President Xi Jinping’s signing of $46bn energy and infrastructure development agreements with Pakistan last month.

During his daylong visit to Tehran, India’s shipping minister inked with his Iranian counterpart Abbas Ahmad Akhoundi a memorandum of understanding on developing the port on the Gulf of Oman. Both sides overruled America’s call for India and other countries not to rush into doing business with Iran. The US has expressed its concern that India is moving too fast and could undermine the sanctions regime.

After a commercial accord is reached on implementing the pact, Indian firms will, according to the Indian government, “lease two existing berths at the port and operationalise them as container and multi-purpose cargo terminals”, providing Afghanis¬tan with access to the sea and reducing its substantial reliance on Pakistan.

The signing ceremony came on the heels of a warning from the US ambassador to India, who said countries engaging with Iran must wait for the outcome of Tehran’s discussions with the P5+1 group — the US, Russia, China, France, Britain and Germany.

With the next round of talks scheduled for May 12 at Geneva, the European Union and the rest of the partners will join the negotiations three days later. As the negotiators seek to wrap up the process by June 30, there is cautious optimism of a breakthrough.

For its part, the Modi administration insists the development of the port in no way violates sanctions and that it is not bound to enforce Washington’s decisions. The port will enable Iran to open up to the Western world once the sanctions are lifted. India had also expressed its interest in developing a key oilfield, but Iran refused to give it gas marketing rights.

During the government of ex-premier Atal Behari Vajpayee, India slashed oil imports from Iran, a move that left the two countries running into rough weather. The situation worsened in 2014 when Iran hiked import duty on Indian rice from 10pc to 45pc, worrying traders and farmers from Punjab, Haryana and UP.

While eyeing a larger role in Wes¬tern Asia, Delhi’s regional diplomatic status will see a huge surge with the development of the port. Iran, meanwhile, wants India to help create a free trade zone near Chabahar, some 70km from Gwadar where the Chinese Overseas Ports Holding Company has agreed to help Pakistan establish a free economic zone.

Islamabad’s constant refusal to provide a land route for Indian shipments to Afghanistan via Wagah has frustrated Delhi’s efforts to engage with Kabul economically and strategically. India has pledged $100m for laying railway lines connecting Afghanistan with Central Asia.

In order to ensure the launch of trade activities at Chabahar, India may enter into discussions with the US for seeking a sanctions waiver. Once the nuclear deal is sealed, New Delhi will invest $85m in the purchase of equipment to set up and run a container terminal and a multi-purpose berth at the port, whose operation is estimated to cost India $22.95m annually.

Officially designated as a free trade and industrial zone by the Iranian government, Chabahar has acquired increased significance in terms of an international trade hub. Poised to connect business growth centres in South Asia, the Middle East and Afghanistan, the free trade area is being connected to Iran’s main rail network.

The writer is a Kabul-based Pakistani journalist.

Published in Dawn, May 10th, 2015

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Pakistan needs to block India’s move to become regional sheriff

The China-Pakistan Economic Corridor (CPEC) project has been mired with cost squabbles in political waters. But amid all this controversy over the CPEC route, New Delhi is rushing to seal deal after inking an MoU with Iran for extending a $150 million loan to develop its Chabahar port.

India plans to lease two docks for a decade that would give it access to Afghanistan and Central Asian energy markets – bypassing Pakistan. Moreover, in collaboration with Tehran and Moscow, India is looking to create a vast network of enhanced connectivity with the land-locked Central Asia and eventually Europe, through the International North-South Transport Corridor (INSTC)

Indian calculus on Pakistan

New Delhi is following a policy of ‘twin track’ by engaging Pakistan’s neighbours but circumventing Pakistan in trade partnerships; and at the same time, maintaining good ties with its civilian leadership. India is playing a similar ‘minus 1’ card in Saarc and now is looking for new regional groupings beyond South Asia.

But will the Chabahar agreement be a ‘real’ game changer and a direct threat to CPEC? Or like Saarc, the triangle would fall prey to Indian’s hegemony?

Yes and maybe. Designated as a free trade zone on the gulf of Oman, Chabahar is a direct competitor to Gwadar. However Indian-Iranian relations have no long-standing history of amity and harmony and as recent as 2014, Iran increased import duty on Indian rice from 10% to 45% while revoking visa-on-arrival for Indian citizens.

Now the deal between Tehran and P-5+1 (US, Russia, China, UK, France and Germany) over its nuclear programme has helped break the ice between the two countries and Modi’s government is now all set to steer the course of regional dynamics.

Iran could use this as an opportunity to grab oil market share from the Saudi-led OPEC, while the Iranian gas would help India diversify its energy mix. Indian companies are also ready to invest more than $20 billion in Iranian oilfields and petrochemical plants.

The deal will also give Afghanistan an alternate port for fulfilling its maritime needs and shall decrease Islamabad’s influence on its foreign policy. Afghan imports through Karachi port have already declined by more than 40% in Feb 2016 and according to estimates, Afghan-Indian trade volume could increase by a four-fold if modalities of a trilateral agreement materialise.

Previously in 2009, India built the “Route 606” to bypass Pakistan for commercial trade at a cost of $150 million. The road connects to the Iranian city Zabol whereas construction work on a Chabahar-Milak-Zaranj-Dilaram route from Iran to Afghanistan is already in progress.

Pakistan’s strategy

There is a need to advance comprehensive trade reforms for sustaining macroeconomic growth and to stop India from becoming a regional sheriff. The post-sanctions era in Iran presents multiple opportunities for Pakistan but pursuing them requires deep understanding of Iran’s complex social, economic and geo-political issues. At present, Pakistan needs to adopt a two-pronged strategy, at a national as well as regional level, to counter Indian threats and emerging geo-political challenges.

At a national level, Pakistan needs to assuage the concerns of smaller provinces whereas political parties need to show maturity and ownership of the CPEC programme. Stakeholders need a full agenda of shared objectives to start with.

At the regional level, the mistrust between India and Pakistan has prevented Saarc to become a model of regional cooperation like the Association of Southeast Asian Nations. Trade under South Asian Free Trade Agreement (SAFTA) is a mere 5% of South Asia’s total trade volume which is not very promising.

Pakistan needs to lobby with small states of Saarc and negotiate e-visa arrangements with states like Sri Lanka and Maldives that are popular tourist destinations. The Beijing-Islamabad axis is not a substitute to regional partnerships and Pakistan needs more cooperative relationships with its neighbours.

Pakistan also needs to sort out its differences with Afghanistan. India has not only shown keen interest in the development of Afghanistan’s natural wealth but has actually delivered on numerous infrastructure projects including the Salma dam and the Afghan parliament building. More than 10,000 Afghan students have studied in India on scholarships in the last decade. Public opinion polls confirm overwhelmingly favourable sentiments for New Delhi.

Islamabad should support Afghan government in developing its agricultural, livestock and industrial sectors.

The writer is a Cambridge graduate and is working as a management consultant Published in The Express Tribune, May 2nd, 2016.

Trade route linking Chabahar Port with Afghanistan a security threat’

ISLAMABAD: Two former defence secretaries insist the trade route which is being established by Iran, India and Afghanistan, linking Chabahar Port with Afghanistan, is a security threat.

The comments made by the former defence secretaries just a week after the agreement for the trade route was signed by Iranian, Afghan and Indian leaders, is a reflection of the opinion held in military circles, which have been deeply suspicious of the port and the trade route.

Speaking on the first day of a three-day workshop on Monday which was hosted by a local think tank, Strategic Vision Institute (SVI) on ‘National Security, Deterrence and Regional Stability in South Asia’, former defence secretary retired Lt-Gen Asif Yasin Malik said: “The alliance between India, Afghanistan and Iran is a security threat to Pakistan” and added that he feared that Pakistan is going into isolation.

“In view of the regional and global environment, I see Pakistan falling into an abyss of isolation primarily because of its own mistakes and partly due to the hostile policies of other states,” he said.

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He blamed the situation on the “dysfunctional Foreign Office” and the absence of a full time foreign minister.

Iran has tried to dispel concerns about its cooperation with India and Afghanistan with its envoy in Islamabad, Mehdi Honardoost last week saying that Pakistan and China should join in on the Chabahar agreement. He had then stressed that the Gwadar and Chabahar ports should not be seen as rivals.

Pakistan’s Foreign Office also views the Chabahar port positively with Adviser on Foreign Affairs Sartaj Aziz saying at a press conference on Thursday that Pakistan did not see Iran’s Chabahar port as a rival and that Pakistan was in fact exploring the possibility of developing links with Gwadar.

Nevertheless, the concerns among the military persist as mirrored by the former defence secretaries.

At the event on Monday, retired Lt-Gen Nadeem Lodhi said the existence of such a “formidable bloc” in the neighbourhood had “ominous and far reaching implications” for Pakistan.

He feared the three-nation bloc will affect Pakistan’s plans for regional economic integration, restoration of internal peace and maintenance of peaceful borders. It will also affect CPEC timelines, he added.

“We need to break out of this encircling move with help from friends... diplomatic manoeuvres and by forging a strong deterrence,” he said, adding that of the three countries, Iran is most likely to pay heed to Pakistani concerns.

He suggested Pakistan use China’s influence for fixing problems. “Iran must not be further alienated and its interests in CPEC should be developed,” Mr Lodhi said.

He said that the defence and strategic relationship with China should be formalised instead of an unwritten understanding.

Other speakers also deliberated on national security and asked the government to broaden its conception of challenges and risks and to respond to them proactively.

Air University Registrar Ghulam Mujadid said that the eminence of security in national priorities is reflected in the four military take-overs in the country and the “ascendancy of military in political, internal and foreign policy decision making”.

“Pakistan needs to correct this strategic myopia. A survivalist mindset about national security dominates the political discourse and continues to be the central pillar in Pakistan’s strategic calculations,” he said.

Such a security focused state, he observed, allocates more resources for defence at the cost of social welfare and human security.

He pointed out that the country lacked forums for national security formulation. Recognising that the establishment of a Cabinet Committee on National Security and the appointment of a national security adviser were steps in the right direction.

Mr Mujadid noted that “decisions on security issues remain ad-hoc and disconnected; formulated and implemented in separate silos, hence policies are reactive instead of being consistent and coherent”.